He served as a representative to Congress from 1976 until 1993, when he was picked to be director of the Office of Management and Budget and later chief of staff for President Bill Clinton. He was seen as a driving force behind balancing the federal budget. He then went on to help guide Clinton's winning 1996 re-election bid.
Seen by many as a reasoned voice inside the Clinton White House, he advised Clinton not to respond to goading from conservatives after a public spat with North Carolina Sen. Jesse Helms. "We can't just react," Panetta counseled, "every time Jesse Helms decides to push his crazy buttons." He would later advise the president to be more forthcoming about his relationship with Monica Lewinsky.